Minority businesses largely left out of stimulus

Minority businesses see little of stimulus money

Published 6:00 am, Monday, February 1, 2010

Ayear ago, Congress approved $787 billion in stimulus funds designed to pump money for new projects into the economy and create jobs.

Ed Ryland hasn't seen signs of it reaching Houston. His commercial real estate firm, Concordis Ryland, has been hoping to capitalize on contracts, especially for government facilities.

Companies and agencies in the Houston area have been awarded almost $222 million in stimulus contracts and another $1.1 billion in grants, according to the government Web site that tracks stimulus dollars.

Little of that money, though, is reaching small women-owned and minority-owned businesses, which account for most job growth.

Instead, Houston-area minority-owned business enterprises, or MBEs, have seen a disproportionately small sliver of the money.

“From an MBE perspective, the program has not produced the type of benefits and rewards — or the opportunities — that we expected,” Ryland said.

“We've seen minority businesses that have lost a significant percentage of their business,” he said. “We keep looking for stimulus funding, not just for minority businesses but for any businesses. If it has hit Houston, it's a pretty well-kept secret.”

The government's tracking data doesn't specify contracts awarded to MBEs, but stimulus loan data provided by the U.S. Small Business Administration illustrates the problem.

In Texas, blacks own 5 percent of the small businesses, yet have received only 3 percent of the money, according to the data, which was compiled by the New America Media, a collaboration of ethnic news organizations. Hispanics own 18 percent of businesses, yet received 11 percent of the loans.

Asian-owned businesses were the exception, accounting for 5 percent of businesses and receiving 7 percent of the loan money.

Many businesses owned by minorities and women aren't large enough to compete for contracts funded by the stimulus program, according to a study last fall by Ohio State University's Kirwan Institute for the Study of Race and Ethnicity.

Nationally, women, blacks and Latinos own about 40 percent of all businesses but they got only about 6.3 percent of the first $25 billion in stimulus contracts the government awarded, the institute found.

“The stimulus money has not worked in terms of providing that essential capital to fuel that growth of small business,” Huebner said.

Robert Jimenez, who owns Today's Business Solutions, which sells office supplies, said he believes it will, but businesses like his won't benefit until grant recipients start spending the money. Many of his clients are colleges and universities, and educational institutions have been among the biggest stimulus recipients. Locally, the Houston Independent School District received almost $86 million, the area's second-biggest grant. (Metro was the biggest, with $87 million.)

HISD is able to draw down the grant as it needs it, using it for everything from adding instructors to awarding contracts as needed, said Sharon Eaves, the district's general manager of budgets and financial planning. Not all of the money is awarded to other businesses, she said.

Both Ryland and Jiminez say they aren't waiting for the stimulus to expand their businesses. As part of their survival strategy, they've been working with existing customers to increase the services they offer. That helps their customers cut costs by dealing with fewer suppliers, while boosting revenue for the companies.

Jiminez said he's been able to double his staff to 10 from five last year. His sales are up 60 percent since 2008.

“I think the opportunity is there for MBEs,” he said.

In Houston, though, the opportunities so far seem to be generated more by the businesses themselves than from the stimulus program.